What I Learned About Financial Planning In My Week “Down Under”

The U.S. Financial Planning Association delegation at lunch in Sydney, Australia

It was fantastic, instructive and inspirational, but way too short.  Our whirlwind week Down Under is unfortunately over and we’re safely back home (even my suitcase, which went walkabout for three days, had the good sense to finally come home!).

I had the privilege of traveling to Australia as part of the U.S. Financial Planning Association’s (FPA’s) international delegation, to meet with leading financial planners, investment advisors, and industry experts “Down Under” and learn more about how this Pacific powerhouse addresses retirement, higher education, home ownership and other financial challenges.

Retirement Superannuation Star

We learned all about Australia’s “superannuation,” or compulsory, largely self-managed retirement accounts which function like self-directed 401(k)s. Very impressive, and funded by employer (not employee) contributions, mind you.

We’re not talking chump change either. This relatively tiny nation of 25 million has saved enough to build the world’s 4th largest pension system, valued at roughly $2 trillion, and it’s growing fast. Wish we could adopt that system here! Australians are undoubtedly better prepared for retirement than we are.

I’m from South Florida. Winter in Sydney required a few extra layers!

Sky High Real Estate

Sydney and Melbourne home prices have ballooned, making these urban centers as unaffordable as San Francisco or Seattle stateside. Mortgages in Australia are not deductible, either (ouch!). That means that for young people, affording that first home is a major financial challenge, and parents might need to help out to make those home-sweet-home dreams a reality.

A More Robust Safety Net

The safety net in Australia is stronger than in the U.S. We got the impression that average wages and benefits are more generous Down Under, with more workers earning a “living wage.” Health care is covered for Australians as part of the total package, so backbreaking medical bills won’t drive citizens into bankruptcy.

One twist: while Australia does have something like our Social Security, it’s means-tested, and only those with lower incomes, not well-off retirees, get the payout. Anther quirk? Australia doesn’t really have a market for long-term care insurance, and there are far fewer options for elder care. That may evolve as Australia’s population ages, and demographic changes make family caregiving less feasible.

Cheaper High Education

Yes, Australians do pay for higher education, but going to college in Australia is less expensive than in the U.S. (no surprise there!). Smart Australian higher education institutions are finding that providing Down Under study opportunities to foreign students, at a premium price, can be a very lucrative cash crop. Why not? It’s a great country to visit, English is the great unifier, and Ozzies are super hospitable.

College loans for Australian nationals are handled in a pretty clever way. Tuition costs are added on to each student’s personal account, and after a deferral period that allows them to get their financial bearings in the working world, young college grads start paying back the loans directly as they file their tax returns, once their income reaches a specified amount. In fact, in a recent informal poll, Australia was rated “best” at handling student debt in a simple and effective manner. Something for the U.S. to learn here.

Financial Planning and Client Concerns Are Universal

Visit with Anne and David Graham, Story Wealth Management in Melbourne, Australia

The most profound discovery? The concerns and challenges faced by the planners we met in Australia are very similar to those we deal with here in the States. We’re not that different in the way we approach our work or in our essential motivation – helping our clients lead a more secure, fulfilling, and meaningful life.

We were graciously invited to visit with financial planners Anne and David Graham at Story Wealth Management in Melbourne. Even though the laws, and regulations, and customs are a tad bit different in Australia, Anne and David’s personal observations about working with clients and helping them reach their financial goals closely echoed the situation back in our own office in Boca Raton, Florida. Different continent, different country, same words. Uncanny.

Other Discoveries

  • Like craft beer? Australia must be heaven. I sampled “Mountain Goat” but “Motorcycle Oil” ran out before we could give it a try.
  • There is lots of (targeted) immigration. Half of Melbourne’s population was reportedly born outside Australia.
  • Koala’s have extra thick fur and a special cartilage pad on their behinds, making it easy-peasy for them to sit in the eucalyptus trees for hours (not making this up!).
  • Vegemite did not win over a lot of fans. Tim Tams were a bigger hit. My fav? There are coffee shops everywhere, so I could get my afternoon latte. Now that’s a civilized country.

About Mari Adam

Mari Adam, Certified Financial Planner™ and President of Adam Financial Associates Inc, has been helping individuals and families chart their financial futures for over twenty-five years. Have a question about your financial situation? Ask Mari!

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One Response to What I Learned About Financial Planning In My Week “Down Under”

  1. Anne Graham September 5, 2018 at 5:58 pm #

    It was an absolute pleasure to host the US FPA congtingent in our offices. Thank you for your conversation, observations and interest in our practice. As you note Mari, different continent, different country but same words. Cheers Anne Graham

    PS – I love vegemite but tim tams are my fave together with a skinny capuchino

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